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MicroStrategy Looks to Mine
Untouched Government Data

By

Glenn R. SimpsonStaff Reporter of The Wall Street Journal

Updated Jan. 3, 2000 12:01 a.m. ET

MicroStrategy Inc.,
which has built a thriving business helping companies find useful information in vast troves of corporate data, wants to do the same with government databanks. To some, that is an unsettling thought.

MicroStrategy's data-mining software already helps Eddie Bauer notice subtle changes in buying habits and GE Capital uncover new efficiencies and cost savings in its huge leased-car fleet. Now, the Vienna, Va., company is calling for Medicare and Medicaid databases to be auctioned off for data-mining, along with federal data on crime, air travel, weather and traffic.

While lots of federal data are already publicly available on the Internet, MicroStrategy's founder and chairman, Michael Saylor, says the government is hoarding even more, a vast and valuable resource wasted. "Information is like mineral or land rights," he says. "If you wanted to get a chain reaction going in medicine, you auction off rights to mine it and harness it, and sell intelligent medicine back to 100 million people."

Janlori Goldman, director of Georgetown University's Health Privacy Project, is skeptical. "If Mr. Saylor wants to auction his medical records, let him start there," she says. "The country is moving in exactly the opposite direction. We have a major crisis of confidence in the health-care system, partly due to the fact we don't have rules in place to protect the privacy of people's medical records."

Ms. Goldman acknowledges that if more federal data were placed in the public domain, with their privacy protected, the quality of health care might improve. "It could be very useful," she says.

The push to gain access to more databanks is part of MicroStrategy's plan to broaden the types of information it can provide. The company already is moving to develop real-time data services for individuals that will allow customers to check investment portfolios, trade stocks or buy plane tickets from just about anywhere. Under a recent deal with discount broker
Ameritrade Holding Corp.
, MicroStrategy is building a service that quickly updates investors with news about their portfolios, which eventually will be linked to online trading.

The initial response from customers is "very, very positive," says Bill Ilnitzki, Ameritrade's vice president of product development.

MicroStrategy "is clearly focused on one of the gold mines of the information economy," says Bill Whyman, an Internet analyst at the investment firm Legg Mason Wood Walker, Baltimore. "Probably the biggest underappreciated asset in the economy today is data," he says.

MicroStrategy is launching a national advertising campaign, capped off by spots on the Super Bowl. But investors already have noticed: Its stock price has soared from $35 in August to $210 Friday on the Nasdaq Stock Market, giving the software maker an eye-popping market value of $6 billion. Half of that is held by Mr. Saylor himself.

Like many high-tech companies in today's heated market, its stock price is wildly overvalued by traditional standards. Unlike many hot tech stocks, it already is profitable: Sales more than doubled in the quarter ended Sept. 30, to $54.6 million, while net income rose 97%, to $3.8 million, or nine cents a diluted share.

As his star rises, the brash and self-promotional Mr. Saylor has burst onto the Washington scene, recently hosting a black-tie birthday party for his company at the Corcoran Gallery of Art. At another Washington soiree, he buttonholed Bill Clinton, urging the president to make public the Federal Bureau of Investigation's vast crime database so data-miners might find ways to improve law enforcement.

Before the information revolution, much routine government data were thought to have little worth. Increasingly, however, technology is unlocking value from such mundane things as property records, drivers' licenses and lists of addresses. Washington is now crowded with companies that make a tidy income processing and reselling data they obtain from the government free of charge or at cost.

By giving the data away, Mr. Saylor argues, the government is essentially cheating taxpayers. He likens it to the old practice of giving away radio spectrum. After years of criticism, the government recently began auctioning spectrum licenses, and reaped billions of dollars. And state governments routinely package data products for sale to private vendors; for some it is an increasingly significant revenue stream.

While citizens don't get any direct benefit when companies resell government data obtained free, they are able to get information free or at cost themselves from government agencies. So when the Commerce Department entered a deal in August with database provider Northern Light to sell government data online, a storm of protest erupted on the Internet and the project was briefly postponed. It has since gone forward; individuals can subscribe for $250 a year, or $5 a day.